Middle East investment in Europe rose by 25 per cent year-on-year during the first half of this year to reach $7.9 billion, according to a report by Colliers International.
Total cross border investment in Europe rose by 32 per cent to top €44 billion, while capital from the Middle East accounted for 13 per cent of investment coming from outside Europe.
The report also highlighted a growing interest among investors for alternative products in continental Europe.
“Middle Eastern buyers are increasingly prepared to venture outside Central London, looking at alternative asset classes such as hotels and serviced apartments in other tier 1 cities,” said John D. Davis, chief executive officer, Middle East & North Africa at Colliers International.
“Recent examples include Qatar Investment Authority’s acquisition of five more properties to its hotel portfolio, located in Cannes, Madrid, Frankfurt, Amsterdam and Rome, while Qatar Armed Forces Investment Portfolio acquired the Hotel Renaissance in Barcelona for approximately €78 million.
“We have also seen Middle East investors play a key role in major deals in Central London during H12014, for example China Life and Qatar Investment Authority taking a 90 per cent interest (70 per cent + 20 per cent) in Clifford Chance HQ in Canary Wharf.”
The report also found that Canadian investors are increasingly active in continental Europe, together with Australian funds and sovereign wealth funds (SWFs) like NBIM and Kuwait Investment Authority.
Middle East investors are forecast to step up their investments in Europe, especially in the property sector over the next few years.
According to a recent report from property consultant CBRE, Middle Eastern investors are expected to spend $180 billion on buying commercial property outside their own region over the next 10 years.
A significant chunk of that investment – roughly $130-$140 billion – is expected to come from regional sovereign wealth funds, while investors, property companies and developers will account for the remaining amount, said CBRE.
Europe is the preferred target and is expected to receive 80 per cent of the $180 billion (around $145 billion) as it offers “diversification, cultural acceptance, high liquidity and market transparency,” said the report.
While close to $85 billion will flow into the UK, $60 billion will be invested in continental Europe, with France, Germany, Italy and Spain among the key target markets.